If you’re behind in paying your bills, you may be contacted by a debt collector — someone who regularly collects debts owed to others. This includes collection agencies, lawyers who collect debts on a regular basis, and companies that buy delinquent debts and then try to collect them.

You have the right to be treated fairly by debt collectors. Under federal law, they can’t use abusive, deceptive or unfair practices to collect from you. But not all debt collectors play by the rules. In fact, the FTC recently settled a case against Rumson, Bolling & Associates, a debt collection company that berated people with obscene and profane language, threatened them with physical harm, told their employers, co-workers, neighbors, and other people about their debts, and falsely threatened them with lawsuits, arrest, seizure of their property, or wage garnishment. All of these actions are against the law, and the FTC has seen to it that abusers pay dearly. The company is permanently banned from the debt collection business and has agreed to pay more than a million dollars in judgments.

It’s important to understand your rights if you’re ever contacted by a debt collector. And if you believe a collector has violated those rights, make sure to visit our page on debt collection for more information.

If you’ve ever gotten a text message on your cell phone telling you that you’ve won a free prize, you’re not alone. During the past year, the FTC has gotten tens of thousands of complaints about unsolicited text messages.

Many of the messages claim that you’ve won a free prize, and feature a link to a website. If you click on the link, you reach a site that supposedly offers the free merchandise. But to get the “free” prize, you have to reveal a lot of personal information — and maybe some money, too. Some of the sites require you to sign up for dietary supplements, skin care products, book of the month clubs, credit cards, government grants, or identity theft protection — most of which require you to pay a shipping fee and cancel a membership within a certain time to avoid being charged monthly.

That you have to share personal information and pay isn’t disclosed until you’ve been drawn into the scam.

Bottomline: “Free” merchandise websites rarely live up to their promises, if ever. Need proof? The FTC recently brought eight cases against 29 defendants who sent illegal spam texts and falsely claimed that prizes or gifts were free.

Mostly, the consumers who dealt with the scam artists involved in the FTC cases never got the free gift they were promised. Many people abandoned the websites once they realized they hadn’t won anything and that the offer for “free” merchandise required them to pay.

But the scam still worked because most people clicked into the website, entering personal information or completing some offers — and generating income for the free merchandise website operators before they quit. The website operators sold the consumers’ information to other marketers and earned commissions from those running the offers advertised on the sites.

When you see a spam text offering a gift, a gift card, or a ‘free’ service, do yourself a favor:

Delete any text that asks you to confirm or provide personal information: Legitimate companies don’t ask for information like your account numbers or passwords by email or text.

Don’t reply, and don’t click on links in the message: Links can install malware on your computer and take you to spoof sites that look real but whose purpose is to steal your information

What if a company called you, demanding you pay for a product they said you ordered? What if they threatened you if you didn’t pay? And what if you never actually ordered that product, never even saw it, and never promised to pay for anything?

A recently-filed FTC case claims that Instant Response Systems, a Brooklyn-based company, did all that and more.

The company used telemarketers to sell medical response systems – basically, a pendant marketed as a way for someone to get help in case of an emergency. The lawsuit says Instant Response Systems targeted older consumers across the United States. That’s just target marketing, right?

Except there’s no “just” about it. According to the lawsuit, the telemarketers would say they were calling in response to the consumer’s request – or a request by the consumer’s family – when that wasn’t true. The FTC says that sometimes, telemarketers would say the person had placed the order and now payment was due. Sometimes, the telemarketer would threaten the consumer with legal action if they didn’t pay, often hundreds of dollars.

What if that happened to you? If it happened to me, I’d probably get in touch with the company to dispute the charges. Seems reasonable, right? According to the FTC’s complaint, though, consumers who contacted Instant Response Systems either couldn’t reach anyone, or were faced with threats, verbal abuse, more demands to pay, and sometimes even threats of a lawsuit.

At the FTC’s request, a US District Court judge temporarily shut down Instant Response Systems. Stay tuned to see what happens next.

In the meantime, how about calling an older loved one, telling them a little about the case, and asking them to tell you if they ever see anything like this?

Hyatt Legal Plans recognizes Sonya Smith-Valentine as January’s Attorney of the Month. A satisfied plan member contacted Hyatt to let us know about the outstanding experience he had while working with Sonya. You can read Hyatt’s Attorney Spotlight for January 2013 here.

The Judge’s order follows a settlement and final order in a federal class action against Worldwide Asset Purchasing issued by U.S. District Court. In the federal case, it was alleged that Worldwide was not properly registered or licensed, misstated amounts owed and improperly stated Social Security numbers in state court filings, and filed collection lawsuits after the statute of limitations had expired.

Maryland District Court dismissed the 3,168 cases with prejudice, which means they cannot be re-filed. The order also states that judgments in the cases are marked as “satisfied” and judgment liens are released.

Worldwide Asset Purchasing is a “debt buying” company, which means that it buys debts from the original creditors, usually credit card companies, for a tiny fraction of the amount owed. Debts may be sold to other debt buyers several times, and the documentation to prove the debt is owed sometimes is little more than the person’s name, last known address and Social Security number.

Maryland residents whose cases have been dismissed will receive written notification from the court.

The FTC has filed a complaint against Nelson Gamble & Associates LLC, Jackson Hunter Morris & Knight LLC, BlackRock Professional Corporation, and Mekhia Capital LLC alleging that the companies’ recorded sales pitches claimed to be “public service announcements.” People were told that because President Obama wants to help consumers get out of debt, people can settle for 50% or less of what they owe. The companies also allegedly “spoofed” their identity by transmitting phony caller ID information — meaning that consumers couldn’t figure out who was calling.

In addition to the telemarketing calls, the companies also pitched debt relief services online. One of the companies’ websites claimed over $90 million of debt settled in the past 12 months — and over $800 million since our inception. The companies claimed to use “proven tactical methods to settle debt by 50% to 80% of your total outstanding balances” and told people that “you can be free from debt in three years or less.” In addition, they said lawyers would provide the services. But according to the FTC, the companies settled few, if any, debts for consumers. And that part about lawyers? Not true, says the FTC.

The FTC alleges that the violations didn’t end there. When consumers stayed on the line after the recorded sales pitch or called one of the numbers on the websites, they were transferred to operators who asked for their Social Security numbers, bank account numbers, and security information — all under the pretext that the information was needed to pull the person’s credit report or confirm their debt-to-income ratio.

However, according to the FTC complaint, for people who signed up for the services, the companies debited an up-front fee of $200 or more from their bank accounts within a few days of the phone call and before the companies had settled any of their debts. In numerous other instances, the FTC says the companies took money from the bank accounts of people who hadn’t enrolled in their services.

the FTC says that in many cases, the companies didn’t honor people’s request to cancel the services and continued to take money from their accounts.

The complaint alleges that the companies violated numerous consumer protection laws, including the FTC Act and the Telemarketing Sales Rule, including the Do Not Call Registry, the ban on robocalls, sections making it illegal to transmit deceptive caller ID information, and sections making it illegal to accept fees upfront before settling consumers’ debts. The complaint also alleges violations the Electronic Fund Transfer Act and Regulation E, which bans debits to consumers’ bank accounts on a recurring basis without their written authorization and without providing consumers with a copy of the authorization. A federal judge in California has issued a temporary restraining order against the companies.

The Maryland State Collection Agency Licensing Board has reached an agreement with LVNV Funding LLC and Resurgent Capital Services, L.P. to settle alleged violations of federal and state debt collection laws. The settlement includes a penalty of $1 million, agreement to dismiss more than 3,500 cases pending in Maryland district courts having balances of over $7.7 million, and credits totaling over $3.8 million which will be applied to the accounts of over 6,200 consumers whose cases have already been adjudicated or settled. LVNV is a consumer debt purchaser that acquires consumer claims in default, while Resurgent is a collection agency that services the consumer claims owned by LVNV and other business entities. They both are part of the Sherman Financial Group LLC family of companies.

In October 2011, the Agency issued an Order to Cease and Desist and Summary Suspension of Collection Agency Licenses against LVNV and Resurgent after the Agency determined that LVNV and Resurgent had engaged in violations of various Maryland state and federal debt collection laws, including the Maryland Collection Agency Licensing Act, the Maryland Consumer Debt Collection Act, and the Fair Debt Collection Practices Act. Conduct included allegedly engaging in collections activities in Maryland without being properly licensed, employing attorneys that filed false or misleading complaints and supporting affidavits in state courts on their behalf, and misrepresenting the amounts of the claims.

Under the terms of the settlement agreement, LVNV and Resurgent will dismiss without prejudice all pending cases in the District Court of Maryland; will provide partial credits in cases with judgments, as well as in some settled cases. The collection agency licenses of LVNV and Resurgent will be fully reinstated.

Dismissals and credits will be submitted to the courts within 15 days of the agreement without any need for action by consumers. For further information, consumers can contact Resurgent Capital Services, L.P. at 1-866-316-1830.

3,564 cases are being dismissed without prejudice, and the amount claimed in these cases totals $7,770,564. For cases with judgments, LVNV will provide a credit for all pre-judgment interest plus attorneys’ fees awarded by the court, with credits being applied to the account balance as of March 12, 2012. If the credit exceeds the balance remaining on the consumers’ account, the account shall be considered satisfied in full as of that date. There are 5,793 consumers entitled to credits pursuant to this provision, and the amount of all credits totals $3,609,367.

For all cases in which there was a settlement prior to a judgment, LVNV credit the accounts with the total amount of the settlement that exceeds the amount claimed, which is the amount sued for in the case excluding any interest, attorney fees and court costs, with the credits being applied to the account balance as of March 12, 2012. There are 453 consumers entitled to credits and the amount of all credits totals $235,824.

The is a significant settlement with a debt collection agency in a case involving automated dialers and messages used to contact consumers on cell phones.

The case against AllianceOne Receivables Management, Inc. is a class action. The lawsuit alleges that AllianceOne violated the Telephone Consumer Protection Act (TCPA) by calling cell phones using an automated dialer or with a prerecorded voice message without the consumers’ prior consent.

Under the terms of the settlement agreement, AllianceOne is to contribute a minimum of $1 million and a maximum of $9 million to a settlement fund that will be dispersed to consumers. The final settlement amount will be determined by how many claims are made by class members. Each eligible consumer will be entitled to a maximum of $40.

The Federal Trade Commission put a stop to an online operation that allegedly lured consumers with a supposedly “free” book falsely promising that it would show them how to power their cars and homes at no cost, and then billed them for an online magazine they never ordered. The defendants behind the alleged scam have agreed to a settlement that requires them to pay almost $2 million for consumer refunds, and permanently bars them from making misleading product claims.

According to the FTC’s complaint against Green Millionaire, the defendants marketed a “Green Millionaire Book” in TV and Internet ads. The ads falsely claimed the book would describe “how to get free gas for life,” “how to put solar panels on your roof for free,” and “how to make your electricity meter go backwards paying you,” with phony testimonial statements such as “I don’t pay for electricity” and “I don’t have car payments, and I don’t pay for fuel.”

The Green Millionaire websites allegedly asked consumers to provide their credit card or bank account number to pay a small shipping and handling fee, without clearly disclosing that they would be charged $29.95 for a two-month subscription to an e-magazine, or $89.95 for a one-year subscription. The defendants allegedly violated the FTC Act by failing to disclose the subscription program, that customers would have to cancel it to avoid additional charges, the program’s cost and how to cancel it, and when they must cancel to avoid charges. They also allegedly debited or charged consumers’ bank or credit card accounts without their consent, misrepresented the book’s contents, and used unsubstantiated endorsements.

The settlement order also prohibits the defendants from using consumers’ billing information to obtain payment without first getting their consent, as well as failing to clearly disclose the terms of any refund or cancellation policy and failing to promptly honor a consumer’s request for a refund or cancellation.

In addition, the order bars the defendants from making any material misrepresentation in the sale of any good or service, including falsely claiming that consumers can get free gas for life, put solar panels on their roofs for free, and make their electricity meter go backward; and from using endorsements and testimonials unless they are true and substantiated. The order also prohibits the defendants from selling or otherwise benefiting from customers’ personal information, and requires them to properly dispose of customers’ personal information within 30 days.

A recent article in the American Banker highlights some of the problems with practice of selling old debts to debt buying companies. It appears Bank of America (just like many other banks) sold portfolios of credit card debt to CACH LLC. A portion of the debt sold was either discharged in bankruptcy or already repaid. The face value of the portfolio was $65 million but CACH bought the portfolio for 1.8 cents on the dollar.

The problem that these sales causes is the consumer is stuck in the middle. If the consumer repaid the debt already or it was discharged, the consumer rightfully believes the debt is done. But the company that bought the “debt” now decides to harass the consumer for payment or, even worse, sue on the debt. In most small claim courts, even though its suppose to be up to the company to prove the consumer owes the debt, in reality most judges are looking for the consumer to prove they don’t owe it. Talk about a nightmare for the consumer. The lesson here is we now need to keep all of our records forever because you never know when a debt is going to come back to life.